It is an unique insight of W. D. Gann (1878 ~ 1955) that market tops and bottoms are inter-related by mathematical principles. With historical price and time information, future market reversals can be predicted. Gann's hypothesis has been tested by numerous market practitioners over time and, up to now, his theories have gained increasing popularity.
Recently, the Australian SPI Futures market may have
come to an important turning points according to the mathematical principles
of W. D. Gann as revealed by the investment software "Gann Forecaster".
This article tries to analyse the current market situation in relation
to the market top before stock crash in October 1987. Time and price principles
as revealed by Gann Square and Gann Wheel show that the market has come
to an important resistance and is viable to major correction.
Gann Square
Gann Square is a method to calculate market support and resistance levels. With the starting point of the market trend at the centre of the square, Cardinal Square starts from the right hand side and expands in anti-clockwise fashion, each step increases or decreases one unit and eventually comes with a Cardinal Square. This method can be used both in terms of price or time.
Support and resistance levels of the market in question are on the following angles in Price Cardinal Square:
Gann Price Square
If we put the major market top 2364 at the centre of Gann Square
and the unit of step is +10 points, the Gann Square is constructed by "Gann
Forecaster Version 1.0" as follows:
The indicated market resistance at 45 degree of Gann Square chart
is at 2924, which is extremely close to recent market top 2921 on 16 April,
1998.
Gann Time Square
If we put 10/6/87 (6 October 1987) as the centre of the Gann Time Square and the unit of increase is 1 month, the Gann Time Square is constructed by "Gann Forecaster Version 1.0" as follows:
The indicated market reversal time at 0 degree of Gann Time Square chart
is 4/6/98 (6 April 1998), which is extremely close to recent market top
2921 on 16 April, 1998.
Gann Wheel
If we put the historical market top information in the Gann Wheel Chart:
Price: 2364
Conversion Factor of Price (CF): 0.1
Time:10/6/87
The Gann Wheel is constructed by "Gann Forecaster Version 1.0" as follows:
In the Gann Wheel Chart, the period 5 April to 20 April is related to 6 October 87 (previous pre- stock crash high) by 180 degree (Opposite). Besides, the period 5 April to 20 April is also related to the green price line by 90 degree (Square). Also, the resistance price level 2900 also appears within the period 5 April to 20 April.
All the above indicate that 2921 of 16 April 1998 may be a major top of SPI, from which a major market correction (crash?) may occur.